Govt needs to check realty sector growth
China's real estate market already has a huge bubble, but it still continues to grow at a breakneck speed. It is high time the government dealt with the issue by issuing explicit macro-guidelines and effecting adjustments, says an article in China Business News. Excerpts:
In the wake of the global financial crisis, China's real estate industry assumed the responsibility of maintaining economic growth. It is true that the realty industry can fuel economic growth; it can grow to a size equal to dozens of related upstream and downstream industries.
But the real estate boom has now created a huge bubble. Since the property industry enjoys a special status in the economy, it is crucial that the government came up with more explicit macro-guidelines and adjustments.
The boom is directly related to the significant easing of real estate policies. At the end of last year, home sales got a boost from the government's preferential real estate policies, which were issued to encourage growth through tax exemptions and discounts on loan interests.
But now, a large number of people have realized the risks and started to worry whether the bubble would sink the industry. And they are calling for adjustments in the preferential real estate policies to cool off the market fever.
The government should get rid of the original mode, too, which is over-reliance on real estate. The problem of extraordinarily high housing prices can be solved only if the government transforms the residential real estate industry into one that fulfills people's basic necessity.
(China Daily 12/16/2009 page9)
